An example of e-commerce failure and its causes


Boo.com which is one of the famous dot.com failures will be the main e-commerce failure company in this discussion. Boo.com was actually a British Internet company founded by three Swedish Entrepreneurs: Ernst Malmsten, Kajsa Leander and Patrik Hedelin . Boo.com was established in 1998 with the intention to sell branded fashion apparel over the internet. The company spent $135 million of Venture capitalists' money in just 18 months, and it was placed into receivership on 18 May 2000 and liquidated.


There a re quite a few reasons behind leads to the failure of Boo.com. The first reason may due the timing company expanding their business. The company tends to expand too fast with aggressive growth plan, launching simultaneously online shops in multiple European countries. The insufficient venture capital leads to the plan backfired and causes the company to liquidate.


The venturing in multiple European countries also indirectly leads to multiple currencies problem, multiple language problem and tax computation problem which occur during the online trading. The design of the website does not consider all these problems therefore lead to dissatisfaction and lost of customer.


The subsequent reason is due to the poor planning and mismanagement. Boo.com. established many online shops around the European countries without considering the internet capability at that time. Its complicated Web site, which relied heavily on JavaScript and Flash, was very slow to load at that time when dial-up Internet usage was the norm.


Another reason is the inefficient of web design. The website was not user friendly and customer felt difficult to get to the place which they want to go. Moreover, the limitation of 3 transactions per 20 minutes also frustrates the customer.


Besides, it is says that the company mysteriously decided to pay the postage on return items from customers but the sales never met expectations.


In my opinion, boo.com was actually a potential company to be succeeded in the e-commerce world. However, the vital problem which contributes to failure was the company tends to neglect the customer needs and norms by blindly pursuing to the advancement of technology. In this case, the company should pay more attention to main factors of their business which is their customer needs first. After that, the other factors which might help to improve the success level of the company will only be consider as the co-ordinate factors of the main. Therefore, we have learned a lesson that pursuing the newest technology does not guarantee a successful outcome. We should consider and integrate all those factors to gain us a higher successful chance.


By identifying these factors, we hope that new comers in e-commerce will brightly use them as guidelines to guide them to the successful path. Hopefully all those companies will make continuous improvement which leads to a win-win situation between company and customer :)

---------------------------------------------------------------------------------------------------

Related Links:


2 comments:

c4ever commerce said...

agree.. most of the e-commerce websites failed because of minor causes.. they tend to be too confident on the technology itself and forget the essential part of business.. customers' satisfaction

Anonymous said...

The fundamental weakness of boo.com is that it had a very poor and inexperienced management team. ASOS is a similar setup to BOO with a very strong management and also operating in UK and expanding into Europe. It is going from strength to strength. Visit their online store (http://www.asos.com/)and you might be persuaded to part with your money.

Post a Comment